Correlation Between Jackson Financial and SSE PLC
Can any of the company-specific risk be diversified away by investing in both Jackson Financial and SSE PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jackson Financial and SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jackson Financial and SSE PLC ADR, you can compare the effects of market volatilities on Jackson Financial and SSE PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jackson Financial with a short position of SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackson Financial and SSE PLC.
Diversification Opportunities for Jackson Financial and SSE PLC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jackson and SSE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jackson Financial and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR and Jackson Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jackson Financial are associated (or correlated) with SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of Jackson Financial i.e., Jackson Financial and SSE PLC go up and down completely randomly.
Pair Corralation between Jackson Financial and SSE PLC
Assuming the 90 days trading horizon Jackson Financial is expected to generate 0.35 times more return on investment than SSE PLC. However, Jackson Financial is 2.87 times less risky than SSE PLC. It trades about 0.03 of its potential returns per unit of risk. SSE PLC ADR is currently generating about -0.28 per unit of risk. If you would invest 2,670 in Jackson Financial on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Jackson Financial or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jackson Financial vs. SSE PLC ADR
Performance |
| Timeline |
| Jackson Financial |
| SSE PLC ADR |
Jackson Financial and SSE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jackson Financial and SSE PLC
The main advantage of trading using opposite Jackson Financial and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jackson Financial position performs unexpectedly, SSE PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SSE PLC will offset losses from the drop in SSE PLC's long position.| Jackson Financial vs. Everus Construction Group | Jackson Financial vs. EMCOR Group | Jackson Financial vs. Plexus Corp | Jackson Financial vs. ChampionX |
| SSE PLC vs. ENEL Societa per | SSE PLC vs. Allete Inc | SSE PLC vs. Companhia Energetica de | SSE PLC vs. The AES |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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